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JKL Ltd is planning to undertake a project requiring an investment of $200,000. The project is expected to generate profits before depreciation and tax of:

JKL Ltd is planning to undertake a project requiring an investment of $200,000. The project is expected to generate profits before depreciation and tax of:

Year

Profit (Rs.)

1

60,000

2

70,000

3

80,000

4

90,000

5

50,000

Depreciation is to be provided at 20% per annum on the straight-line basis, and the tax rate is 25%. Required:

  1. Compute the Payback Period and ARR
  2. Determine NPV and PI, assuming the cost of capital is 11%
  3. Calculate the IRR
  4. Perform a break-even analysis for the project

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